18 of 2020

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                                                              Newsletter No. 18 / 22 May 2020                             

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Fashion industry mourns passing of SA fashion designer Coenraad de Mol

The local fashion industry is devastated and in shock after the passing of leading South African designer Coenraad de Mol.

De Mol passed away on Tuesday.

“Coenraad was a highly gifted and knowledgeable industry leader who derived great joy from the creative process which he expressed in his cutting-edge De Mil menswear label which was most recently seen at the Cape Wools and Mohair SA Designer Challenge show at SA Fashion Week in October 2019,” said Lucilla Booyzen, director of the South African Fashion Week.

“He was a perfectionist, exceptionally generous with his expertise and took great delight in his role as design and production technology tutor of SAFW’s 21 Steps to Retail Designer Programme”, she added.

De Mil was established in 1997 and moved into male-inspired, gender-neutral clothing in 2007. The designer said he did not regard gender neutrality as just a theme but “It’s what I do,” he would say.

His designs catered to those who don’t have a place as well as those who choose not to be boxed-in by societal norms or conventions.

Photographer Eunice Driver expressed her sadness on SA Fashion Week’s Instagram post saying: “What a loss for humanity and SA fashion”.

While Paul Tilsley took to Twitter to pay his respects, “Devastated. It turns out this was his final bow. Cenraad de Mol, known for his label DE MIL, at  @safashionweek AW20.  Coenraad passed on last night. A real friend, gone. A real creative force, lost to this world.”

The industry has lost both a rare and visionary creative as well as a caring and committed friend, employer, mentor, and to many.  IOL

US donates 730 000 masks for South Africa’s health department

By Donna Slater

The US government, through the US Department of Defense’s Defense Threat Reduction Agency’s Biological Threat Reduction Programme (BTRP), has procured and started distributing 729 000 protective masks to South Africa’s Department of Health (DoH) to help curb the spread of Covid-19.

The masks, which were locally sourced, are approved by the European Union and are the equivalent of the N95 respirator mask used in the US.

The DoH plans to distribute the masks to health workers on front lines in all nine of South Africa’s provinces.

US Ambassador Lana Marks says that, in addition to its significant financial and technical assistance, the US’s donation will help to keep essential health workers safe as they work to respond to the Covid-19 pandemic in South Africa. “Our ongoing partnership with South Africa is ensuring the fight against Covid-19 is swift and effective.”

US Embassy personnel delivered the first consignment of 26 000 masks to the DoH headquarters in Pretoria on May 15. Each subsequent consignment will be delivered to the DoH weekly until all 729 000 masks are provided.

In addition to this donation of locally sourced personal protective equipment, the BTRP has been working with the South African government since 2010 to enhance disease detection, laboratory-based diagnostics and disease outbreak investigation capacity, which has strengthened South Africa’s position as a regional leader in biosecurity, biosafety and diagnostic training for the Southern African Development Community.

To date, the US Centers for Disease Control and Prevention has committed $13.2-million in funding, along with $8.4-million in assistance through the US Agency for International Development. This brings the total US government commitment to South Africa’s Covid-19 response to over $21.5-million.

Further, through the US President’s Emergency Plan for AIDS Relief, the US is supporting up to 5 400 community healthcare workers to assist with the South African government’s community Covid-19 screening campaign and provide HIV treatment support on the front lines. EN

TFG COVID-19 and trading update

The Board of Directors and management of TFG have been monitoring and proactively responding to the COVID-19 outbreak since the World Health Organisation (WHO) declared it a global emergency on 30 January 2020. We acknowledge the severity of the situation and continue to focus on mitigating the risks and impact of the pandemic on all our businesses and our stakeholders.

We continue to prioritize the safety and wellbeing of our employees, customers and suppliers. Our business continuity crisis team, consisting of senior leadership, was constituted to monitor and immediately respond to the continuously changing environment and a number of measures have been implemented since early February, across all our jurisdictions, to safeguard our stakeholders. We continue to be guided by the guidelines provided by the WHO, the National Institute for Communicable Diseases (NICD), the Department of Health and other Government Ministries in each of our territories.

The impact of COVID-19 is being felt in all our operations globally. We initially experienced a significant decline in demand for our products and services as our customers responded to the calls for social distancing and more recently because of lockdowns and store closures in most of our countries of operation. This initial decline in demand has now started to reverse as our stores have partially re-opened in our various territories.

In South Africa, as a result of the initial lockdown announced by President Ramaphosa, all TFG’s operations (stores, e-commerce, head office, distribution centres and manufacturing facilities) were closed from 27 March 2020 to 30 April 2020. Our Maitland manufacturing facility in Cape Town recommenced operations during the week of 27 April 2020 in a phased manner in order to start manufacturing protective face masks for our staff. Clothing production will recommence over the next few days. The rest of our operations (including stores and e-commerce) opened on 1 May 2020 in a phased and risk-adjusted manner in order to support the provision of permitted goods and services under Level 4 of the lockdown.

In the UK, Government-enforced lockdowns have been in place since 23 March 2020. Although a partial easing was introduced for certain sectors from 11 May 2020, this did not include fashion retail and hence TFG London’s operations have been closed since 23 March 2020, except for e-commerce activity, which it is pleasing to note has continued to strengthen over the past weeks. TFG London has successfully accessed UK Government funding to support furloughed staff, as well as in relation to business rates and other property reliefs. TFG London’s operations in other countries have similarly been impacted by lockdowns and store closures.

TFG Australia closed all of its stores on 27 March 2020 in response to Government restrictions and regulations on social distancing. During the period of store closures, the business has continued to trade online and the performance has been above expectation. As a result of the success the Australian restrictions have had in flattening the infection curve, on 8 May 2020, the Australian Government announced a 3 stage process to relax restrictions. TFG Australia has prepared its stores to re-open with COVID-19 Policies and Procedures in place. Store openings have now commenced and it is anticipated that all TFG Australia stores will be re-opened by the end of May 2020.

Group Turnover in April 2020 was significantly lower than April 2019. For reference, the Group achieved turnover of R3.2bn for the first five weeks of FY2020.

Supply Chain Risk Management
We have been managing the impact of COVID-19 on our supply chain since early February 2020. In respect of TFG Africa we have, over the past 5 years, strategically diversified our supply chain to reduce reliance on China and other international suppliers where it made sense to do so. Together with South African Government support, we have expanded manufacturing facilities locally, creating world-class manufacturing in our strategic hubs of the Western Cape and KwaZulu-Natal. We already manufacture in excess of 11.5 million units per annum in our own manufacturing facilities and will continue to expand our local production.

As the news of the pandemic and its impact on China broke, our initial focus was on mitigating the risk of disruption to the flow of goods from China (which accounts for c.37% of TFG Africa’s orders). We worked with our own factories and regional suppliers and were able to largely limit the impact of COVID-19 disruptions on our supply chain. Focusing on our strategy to increase the contribution of our own locally manufactured product means that we are well positioned to respond to global supply chain disruptions. More recently, many of our Chinese suppliers have restarted production and exporting goods.

Similarly, in respect of TFG London and TFG Australia, we have largely been able to mitigate the impact of COVID-19 on our supply chains.

March 2020 Trading Update
In respect of TFG Africa, we achieved strong sales growth during the beginning of March, pre-lockdown, despite the heavy promotional activity in the market, with double digit turnover growth in the first week of March and same store turnover growth of 9.9%. We also continued to enjoy solid double-digit cash turnover growth. The impact of COVID-19 however, was significant in the second half of the month. In respect of TFG London and TFG Australia, the impact of COVID-19 was already felt from the 1st and 2nd weeks of March respectively.

The impact on turnover in March 2020 was as follows:
• TFG Africa: For the period between 1 March 2020 and 14 March 2020, turnover grew 8.1%; and for the period between 15 March 2020 and 28 March 2020, turnover decreased by 34.2%.
• TFG London: The COVID-19 impact was felt earlier for TFG London and for the period between 1 March 2020 and 14 March 2020, turnover decreased by 22.9% (GBP); and for the period between 15 March 2020 and 28 March 2020, turnover decreased by 94.7% (GBP).
• TFG Australia: For the period between 2 March 2020 and 15 March 2020, turnover grew 7.7% (AUD); and for the period between 16 March 2020 and 29 March 2020, turnover decreased by 57.6% (AUD).

Twelve month Trading Update to 31 March 2020
The Group’s consolidated turnover grew 3.6% for the twelve months to 31 March 2020 when compared to the same period in the previous financial year.

The impact of the lockdowns and store closures in all three of our jurisdictions and the ongoing uncertainty will have a significant impact on our business in FY2021. We continue to monitor the impact carefully and scenario planning is critical to our forward planning. However, given this prevailing uncertainty, it is difficult to predict with accuracy what the extent of this impact will be.

Stakeholders are advised that our FY2020 financial year end falls within the lockdown period and as a result, the processes required to finalise the Group’s financial results have been delayed. The Group will release its annual financial results for the year ended 31 March 2020 on Thursday, 18 June 2020.

The Covid-19 pandemic is dynamic and continues to have a massive impact on the way we work and how our customers shop. Our focus is to adapt our business as efficiently as possible to deal with the pandemic with the ultimate aim of delivering long term shareholder value to our stakeholders. We will continue to update stakeholders in an efficient manner as the situation develops.

Massmart trading update

Shareholders are referred to the SENS announcement issued on 30 March 2020 which provided an update of the impact of the Covid-19 national lockdown on the Massmart Group. As previously reported, Massmart supports the measures the South African Government has outlined to contain the spread of the Covid-19 virus. In line with regulations and amendments as published, the following Massmart formats were registered with the Department of Trade and Industry (“DTI”) to enable trading activity during the level 5 lockdown period: Makro, Wholesale Cash & Carry stores, Game, Shield Buying Group, Rhino and Cambridge Food.

Whilst the above formats continued trading during this period, trading was restricted to essential goods. Consequently, Game and Makro did not trade in general merchandise, save for those categories falling under the definition of basic and essential goods. No alcoholic or tobacco products were sold and our South African Builders stores were not permitted to trade in accordance with the regulations. Likewise, our non-essential product distribution network and our home and regional offices were closed with almost all of our regional and home office associates working remotely.

Whilst we initially planned for a 21-day level 5 lockdown period, we developed in an abundance of caution robust contingency plans and procedures in the event that this period was extended. We were therefore well positioned and prepared when the level 5 lockdown was extended to a period of 5 weeks, ending on 1 May 2020. Massmart pro-actively engaged with the DTI on additional products to be authorized for trade, particularly where these supported and facilitated the government’s objective of encouraging home confinement including “work-from-home” and “school-from-home”. We were therefore pleased to note the inclusion of these product categories in the amended Level 5 regulations that came into effect in mid-April. Similarly, we were also pleased to be authorized to open selected Builders stores to trade with essential service providers during the last week of the level 5 lockdown, with supplies being limited to those needed in the execution of emergency and essential repairs and maintenance.

Notwithstanding these developments, Massmart was unable to trade in the majority of general merchandise, home improvement and liquor products for most of April. These untradeable product categories represent a significant portion of our overall merchandise offering. The contribution of these product categories to sales in the 2019 financial year was as follows: General Merchandise (26%), Liquor (15%) and Home Improvement (15%). Given the high level of contribution of these categories to total sales, April Covid-19 sales were significantly lower than would be the case under normal trading conditions.

Sales update for 13 week period ended
As previously reported, for the 13-week period ended 29 March 2020, total sales increased by 1.3% over the prior year, with comparable store sales increasing by 0.9% over the same period. As mentioned, the Covid-19 lockdown had a significant impact on normal trading patterns. Consequently, total sales for the 19 weeks ended 10 May 2020 amounted to R28.2 billion, and were 11.9% lower than the same period last year. Comparable store sales were 12.1% lower than last year. Sales from our South African stores amounted to R25.3 billion, 13.1% lower than last year, with comparable store sales decreasing by 13.2%. Total sales from our ex-South Africa stores amounted to R2.9 billion, 1.3% higher than last year, with comparable stores decreasing by 0.3%.

Liquidity and cash flow management
The intensified pressure resulting from extended Covid-19 trading restrictions increased the daily focus on liquidity and cash flow management. Massmart has a strong balance sheet and based on our cash flow forecasts, has sufficient cash facilities and resources to meet its obligations.

In line with good financial practice, Massmart continued to focus on prudent cash flow management and initiatives to improve cash generation performance. These included initiatives to negotiate rental reductions and improved, mutually beneficial terms with strategic suppliers. We were fortunate that most of these interventions were in-flight and publically confirmed prior to the onset of the lockdown. Massmart has met all payment obligations throughout the lockdown period and has continued to pay all employees in full. We will continue to proactively work with all suppliers and stakeholders to manage our cash position going forward including:
*Negotiating and participating in the rental relief package from the Property Industry Group;
*Vendor engagement sessions to negotiate mutually beneficial commercial terms with key suppliers (to date we have engaged with ± 67% of our trade spend base);
*Engaging with the South African Revenue Services to obtain outstanding VAT and Income Tax refunds;
*Applying for available Employee Tax Incentive relief measures such as Temporary Employment and Relief Scheme and Skills Development Levy relief;
*Sensibly Reducing Capex for the full year; and
*Aggressively pursuing cost reduction initiatives as already outlined in our turnaround plan

Massmart’s current focus
We remain concerned with regard to the impact of a prolonged lockdown and limited trading environment on the South African economy and population. We take pride in our responsibility as an essential services provider and our ability to provide South Africans with food, basic and essential goods during this period. We remain focused on ensuring a safe operating environment for our customers and associates, and have implemented various measures and initiatives in order to achieve this. These include measures to ensure our associates can travel safely to and from work on a daily basis, and introducing daily associate and customer screening. We have taken steps to optimise the supply of food, basic and essential goods and ensuring the availability of these products in-store, while our online platforms are processing and fulfilling customer orders of basic and essential goods. All other online orders will be processed for delivery once the appropriate lockdown level allows for this.

The factors impacting financial performance remain fluid and adds complexity to short term forecasting.
Updated information will be provided to shareholders once there is a reasonable degree of certainty
around financial performance.

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Pick n Pay – Director appointments

Pick n Pay announced the appointment, effective 18 May 2020, of Mariam Cassim and Dr Haroon Bhorat as independent non-executive directors.

In addition, with effect from 4 August 2020, Annemarie van der Merwe will be joining our board, on which date Alex Mathole will be stepping off the board.

Classifieds:-

Looking for T shirt manufacturer

Looking for T shirt manufacturer who can reliably and consistently manufacture approximately 30 000 units per month for the corporate market.

Please contact Dorienne Tucker at doriennet@gmail.com

Did you know……..

Signature Suit

Coco Chanel designed the signature “Chanel Suit” in the 1920s, and often wore it paired with a short-cropped haircut. The suit was designed for comfort and mobility, and featured rather “masculine” lines for the time. The suit was widely criticized at the time, but the suit was re-debuted in 1954, when it became a massive hit. The Chanel Suit became hugely famous, and was popularized by style icons like Jacqueline Kennedy.

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